1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made as of October 18, 1996, between ProMedCo,
Inc. a Texas corporation (the "Company"), and Xxxxxxx X. Xxxxxxx ("Executive").
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby employs Executive, and Executive accepts
employment with the Company, under the terms and conditions set forth in this
Agreement for the period beginning on the date hereof and ending as provided in
paragraph 4 hereof (the "Employment Period"). The date on which Executive ceases
to be employed by the Company and/or its Subsidiaries (as defined below) or its
successors or assigns is referred to herein as the "Termination Date."
2. POSITION AND DUTIES.
(a) During the Employment Period, Executive shall perform such duties for the
Company, its affiliates and its Subsidiaries as the Company's Chief Executive
Officer (the "CEO") may specify in his sole discretion. Executive shall serve as
Senior Vice President of the Company.
(b) Executive shall devote Executive's best efforts and full business time and
attention (except for permitted vacation periods and reasonable periods of
illness or other incapacity) to the business and affairs of the Company, its
affiliates and its Subsidiaries. Executive shall perform such duties and
responsibilities to the best of Executive's abilities in a diligent,
trustworthy, businesslike and efficient manner.
(c) For purposes of this Agreement, "Subsidiaries" shall mean any corporation of
which the securities having at least 50% of the voting power in electing
directors are, at the time of determination, owned by the Company, directly or
through one or more Subsidiaries.
3. COMPENSATION AND BENEFITS.
(a) During the Employment Period, Executive's Base Salary (the "Base Salary")
shall be $150,000 per annum or such higher rate as the Compensation Committee
may designate from time to time. The Base Salary shall be subject to annual
increases of no less than the increase in the Consumer Price Index for all goods
and services, U.S. All City Average Report, published by the United States
Department of Labor for the preceding 12 months. The Base Salary shall be
payable in regular installments in accordance with the Company's general payroll
practices.
(b) The Company shall reimburse Executive for all reasonable expenses incurred
by her in the course of performing her duties under this Agreement which are
consistent with the Company's policies in effect from time to time with respect
to travel, entertainment and other business expenses, subject to the Company's
requirements with respect to reporting and documentation of such expenses.
(c) The Company will pay relocation expenses as follows:
(i) temporary housing expense in Fort Worth for a maximum period of six
months, not to exceed $1,000 per month.
2
(ii) moving expenses will be reimbursed, based on competitive bids as
approved by the CEO,
(iii) The Company will "gross up" the reimbursement of such expenses that are
taxable as compensation to the Executive.
(d) In addition to the Base Salary, the Company may award a bonus to Executive
following the end of each fiscal year during the Employment Period based
upon the Company's achievement of operating goals during such fiscal year.
The percentage and goals shall be as approved by the Compensation Committee
of the Board of Directors for each such fiscal year, and will typically be
structured such that a portion will be payable after the end of the fiscal
year (the "Current Portion") with the remaining balance payable in equal
amounts after the end of each of the following three fiscal years, provided
Executive is still employed by Company on such payment dates. The Current
Portion of the bonus, if any, shall be payable upon determination of the
amount due, approximately 75 days after the end of the fiscal year.
(e) In addition to the Base Salary and any bonuses payable to Executive
pursuant to this paragraph, during the Employment Period Executive
shall be entitled to participate in all benefit plans adopted by
Company for all or a select group of its employees, including:
(I) term life insurance, health insurance and disability insurance
coverage,
(ii) participation in a stock option program with grants as approved by the
option Committee from time to time, with an initial grant of 100,000
shares exercisable at 85% of the IPO price, and
(iii) annual paid vacation in accordance with Company's policies as from time to
time established.
4. TERM.
(a) The Employment Period is for a term of two years ending on October 18,
1998, provided that (i) the Employment Period shall terminate prior to such
date upon Executive's resignation, death or permanent disability or
incapacity (as determined by the Board in its good faith judgment) and (ii)
the Employment Period may be terminated by the Company at any time prior to
such date For Cause (as defined below) or Without Cause. The Employment
Period is automatically extended for successive years unless notice to the
contrary is given not later than ninety (90) days preceding the end of the
final year of the contract.
(b) If the Employment Period is terminated by the Company Without Cause prior
to the second anniversary of the date of this Agreement, Executive shall be
entitled to receive her Base Salary, as in effect immediately prior to the
Termination Date, plus the average of bonuses paid during the prior three
years, through the second anniversary of this Agreement, or one year,
whichever is greater, so long as Executive has not breached the provisions
of paragraphs 5, 6 and 7 hereof. The Base Salary and bonus payments
described in this paragraph 4(b) shall be payable in regular installments
in accordance with the Company's general payroll practice.
(c) If the Employment Period is terminated by the Company For Cause or is
terminated as a result of Executive's resignation or normal expiration of
the Agreement, Executive shall be entitled to receive only her Base Salary
through the Termination Date. In the case of normal expiration, any earned
bonus which is due will be paid.
3
(d) All of Executive's rights to fringe benefits and bonuses hereunder (if any)
accruing after the termination of the Employment Period shall cease upon
termination, provided however, if Employment Period is terminated by the
Company Without Cause ((4(b) above)), term life, health and disability
insurance will continue through the second anniversary of this Agreement,
or one year, which ever is greater, so long as Executive has not breached
the provisions of paragraphs 5, 6 and 7 hereof.
(e) For purposes of this Agreement, "Cause" shall mean (i) the commission of a
felony or a crime involving moral turpitude, (ii) the commission of any act
involving dishonesty, embezzlement or fraud with respect to the Company or
any of its Subsidiaries, (iii) conduct tending to bring the Company or any
of its Subsidiaries into substantial public disgrace or disrepute, (iv)
failure to perform duties as reasonably directed by the Company's CEO, (v)
gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries, (vi) Executive's violation of the non-competition
provisions of Section 7, (vii) Executive's material breach of any duty owed
to the Company, including without limitation the duty of loyalty, or (vii)
any other material breach of this Agreement, all of the above as determined
solely by the CEO of the Company. Cause shall not include acts or failure
to act if Executive has exercised substantial efforts in good faith to
perform the duties reasonably assigned or appropriate to her position, as
determined solely by the CEO.
(f) If a "Change of Control" occurs and the Employment Period is terminated or
Executive voluntarily resigns within 12 months, such termination shall
constitute a termination Without Cause. For this purpose, a "Change of
Control" occurs when:
- any "Person" or "Group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 ("Exchange Act")), other than the Executive
or the Founders (Xxxxxxx X. Xxxxxxxx, H. Xxxxx Xxxxx, E. Xxxxxx Xxxxxx, and Xxxx
X. XxXxxxxx), or an entity the majority of the voting stock of which is owned or
controlled by the Executive or the Founders becomes the "beneficial owner"
(within the meaning of Rule 13d-3 and/or Rule 13d-5 under the Exchange Act,
except that a Person shall be deemed to have "beneficial ownership" of all
shares that such Person has the right to acquire without condition, other than
the passage of time, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly 30% or more of the total voting
power of the then outstanding voting stock of the Company; or
- the Company consolidates with or merges into another Person or conveys,
transfers or leases all or substantially all of its assets to any Person, or any
corporation consolidates with or merges into the Company pursuant to a
transaction in which the outstanding voting stock of the Company is changed into
or exchanged for cash, securities or other property, other than a transaction
between the Company and (i) an Affiliate of the Company, or (ii) any other
entity owned or controlled by the Founders.
In addition to the severance rights provided in section 4(b), if a Change of
Control occurs, any unvested options will vest immediately and Executive shall
have 36 months to exercise all options. Notwithstanding the 36 month exercise
period, the exercise of an option shall not be permitted more than ten years
after the date on which the option was granted.
5. CONFIDENTIAL INFORMATION. The Executive acknowledges that the information,
observations and data obtained by her while employed by the Company concerning
the business or affairs of the Company, any of its affiliates or any Subsidiary
("Confidential Information") are the property of the Company or such affiliate
or Subsidiary, as the case may be. Therefore, Executive agrees not to disclose
to any
4
unauthorized person or use for Executive's own account any Confidential
Information without the prior written consent of the Company, unless and to the
extent that the aforementioned matters become generally known to and available
for use by the public other than as a result of Executive's acts or omissions to
act. Executive shall deliver to the Company at the termination of the Employment
Period, or at any other time the Company may request, all memoranda, notes,
plans, records, reports, computer tapes and software and other documents and
data (and copies thereof) relating to the Confidential Information, Work Product
or the business of the Company, any of its affiliates or any Subsidiary which
Executive may then possess or have under her control.
6. INVENTIONS AND PATENTS. Executive agrees that all inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports, and
all similar or related information which relates to the Company's or any of its
Subsidiaries' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive while employed by the Company and/or its Subsidiaries ("Work
Product") belong to the Company or such Subsidiary. Executive will promptly
disclose such Work Product to the Board and perform all actions reasonably
requested by the Board (whether during or after the Employment Period) to
establish and confirm such ownership (including, without limitation,
assignments, consents, powers of attorney and other instruments).
7. NON-COMPETE, NON-SOLICITATION.
(a) Executive acknowledges that in the course of her employment with the
Company he will become familiar with the information concerning the
Company, its affiliates, Subsidiaries and its predecessors and that her
services have been and will be of special, unique and extraordinary value
to the Company. Therefore, Executive agrees that, during the Employment
Period and for the period of two years thereafter, the Executive shall not
directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in any business competing with
the business of the Company or its Subsidiaries as such businesses exist or
are in process on the date of the termination of Executive's employment,
within any geographic area in which the Company, its affiliates or its
Subsidiaries engage or plan to engage in such businesses. Nothing herein
shall prohibit Executive from being a passive owner of not more than 3% of
the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of
such corporation.
(b) During the non-compete Period, executive shall not directly or indirectly
through another entity (i) induce or attempt to induce any employee of the
Company, any of its affiliates or any Subsidiary to leave the employ of the
Company or such affiliate or Subsidiary, or in any way interfere with the
relationship between the Company, any of its affiliates or any Subsidiary
and any employee thereof, (ii) hire any person who was an employee of the
Company, any of its affiliates or any Subsidiary at any time during the
Employment Period, or (iii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Company, any of its
affiliates or any subsidiary to cease doing business with the Company or
such affiliate or Subsidiary, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company, any of its affiliates or any Subsidiary.
(c) If Executive is terminated by the Company Without Cause or the Company
is liquidated, the Non-compete provisions of this Agreement will also
terminate upon the Termination Date or date of liquidation.
5
8. ENFORCEMENT. If, at the time of enforcement of paragraph 5, 6 or 7 of this
Agreement, a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area. Because Executive's services
are unique and because Executive has access to Confidential Information and Work
Product, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event of a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security).
9. EXECUTIVE REPRESENTATION. Executive hereby represents and warrants to the
Company that (i) the execution, delivery and performance of this Agreement by
Executive does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Executive is a party or by which he is bound, (ii) Executive is not a
party to or bound by an employment agreement, non-compete agreement or
confidentiality agreement with any other person or entity, and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
10. SURVIVAL. Paragraphs 5, 6 and 7 shall survive and continue in full force in
accordance with their terms notwithstanding any termination of the Employment
Period, unless such termination was Without Cause.
11. NOTICES. Any notice provided for in this Agreement shall be in writing and
shall be either personally delivered, or mailed by first class mail, return
receipt requested, to the recipient at the Address indicated below:
Notice to Executive: 0000 Xxxxx Xxxxx, Xxxxxxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Notices to Company 000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.
12. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
13. COMPLETE AGREEMENT. This Agreement, those documents expressly referred to
herein and other documents of even date herewith embody the complete agreement
and understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the
6 parties, written or oral, which may be related to the subject matter hereof in
any way.
14. COUNTERPARTS. This Agreement may be executed in separate counterparts, each
of which is deemed to be in an original and all of which taken together
constitute one and the same agreement.
15. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive, the Company and their respective
heirs, successors and assigns, except that Executive may not assign her rights
or delegate her obligations hereunder without the prior written consent of the
Company.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Texas, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Texas or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Texas. In furtherance of the
foregoing, the internal law of the State of Texas shall control the
interpretation and construction of this Agreement, even though under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
17. AMENDMENT AND WAIVER. The provisions of this Agreement may be amended or
waived only with the prior written consent of the Company and Executive, and no
course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
18. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
19. NO STRICT CONSTRUCTION; INTERPRETATION. The language used in this agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent and no rule of strict construction will be applied against any
person. The term " including" as used in this Agreement is used to list items by
way of example and shall not be deemed to constitute a limitation of any term or
provision contained herein. As used in this Agreement, the singular or plural
number shall be deemed to include the other whenever the context so requires.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
ProMedCo, Inc. "Executive"
BY: /s/ H. XXXXX XXXXX /s/ XXXXXXX X. XXXXXXX
H. Xxxxx Xxxxx Xxxxxxx X. Xxxxxxx
President and CEO
